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Weekly Recap | March 21, 2022

Weekly Recap | March 21, 2022

| March 24, 2022
Weekly Recap

March 14-18, 2022 Recap

Stocks Surges

Best Week in 15 Months
Stocks finished the week with four days of solid gains even as the Federal Reserve launched a new cycle of interest rate hikes. Gains came following declines in seven of the eight prior trading days as fears of an overly aggressive Fed response to high inflation failed to materialize and Fed Chairman Powell shared his conviction that the U.S. will avoid a recession.  The week ended upbeat after Chinese President Xi assured President Biden in a two-hour Friday video conference that China didn’t want Russia to invade Ukraine. Last week’s gains on the S&P 500 and Nasdaq Composite were the largest since the week ending November 6, 2020, with the benchmark index recovering about half of its losses for the year.

For the Week…
The S&P 500 rallied 6.19%, the Dow Industrials jumped 5.50% and the tech-heavy Nasdaq Composite surged 8.20%. Small caps (Russell 2000) trailed, climbing 5.43%, while growth-oriented Russell Mid caps led the advance, surging twice as much as their value counterparts (9.49% vs. 4.66%).

Fed Raises Rates
FOMC policymakers voted in a ¼-point rate hike to a new Fed Funds range of 0.25%-0.50%, its first increase since December 2018. Fed Chairman Powell signaled six more similar moves by the end of this year with the Fed’s median dot-plot forecast indicating a policy rate near 2% at year-end and 2.75% by the end of next year 2023.

Consumer Discretionary Roars
10 of the 11 major sector groups posted gains last week led by Consumer Discretionary (+9.28%), Technology (+7.88%) and Financials (+7.18%). Utilities climbed the least, up 0.56%, while Energy (-3.58%) was the lone decliner.  Energy remains this year’s best performer, up 33.70%.

Treasury Prices Fall
Treasury prices declined as yields rose sharply another week. The yield on benchmark 10-year Treasury notes climbed nearly 15 basis points (+0.15%) to end Friday at 2.148%. The U.S. Dollar Index capped a third-straight weekly gain (+0.48%) and is up 5.3% over the past six months. U.S. WTI crude oil futures declined to $103.09 from $109.33/barrel.

The Latest from @CeteraIM

Watch the Two-Year Treasury Yield

Used Home Supply at Dismal Levels

New Housing Construction Soars

Economic Calendar

Monday, March 21
Chicago Fed National Activity.

Tuesday, March 22
Richmond Fed Manufacturing Activity.

Wednesday, March 23
New Home Sales.

Thursday, March 24
Jobless Claims, Durable Goods Orders. S&P Global/Markit U.S. Mfg & Services PMIs.

Friday, March 25
Consumer Sentiment, Pending Home Sales.

New housing construction rose to the highest level since 2006. There were 1.77 million housing starts annualized last month, an increase of 6.8% from January. Historically low inventory of existing homes for sale is driving demand for new construction. Home prices are up more than 30% over the last two years and the 30-year fixed mortgage rate is above 4%. Housing activity could ease if affordability becomes a headwind for housing demand.

This report is created by Cetera Investment Management LLC. For more insights and information from the team, follow @CeteraIM on Twitter.

About Cetera® Investment Management
Cetera Investment Management LLC is an SEC registered investment adviser owned by Cetera Financial Group®. Cetera Investment Management provides market perspectives, portfolio guidance, model management, and other investment advice to its affiliated broker-dealers, dually registered broker-dealers and registered investment advisers.

About Cetera Financial Group
“Cetera Financial Group” refers to the network of independent retail firms encompassing, among others, Cetera Advisors LLC, Cetera Advisor Networks LLC, Cetera Investment Services LLC (marketed as Cetera Financial Institutions or Cetera Investors), Cetera Financial Specialists LLC, and First Allied Securities, Inc. All firms are members FINRA / SIPC. Located at 655 W Broadway, 11th Floor, San Diego, CA 92101

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The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.

The S&P 500 is an index of 500 stocks chosen for market size, liquidity and industry grouping (among other factors) designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.

The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity universe and is a subset of the Russell 3000 Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies representing approximately 98% of the investable U.S. equity market.

The Russell Midcap Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000 Index. It includes approximately 800 of the smallest securities based on a combination of their market cap and current index membership.

The Bloomberg Barclays US Aggregate Bond Index, which was originally called the Lehman Aggregate Bond Index, is a broad based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government–related and corporate debt securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency) debt securities that are rated at least Baa3 by Moody’s and BBB- by S&P. Taxable municipals, including Build America bonds and a small amount of foreign bonds traded in U.S. markets are also included. Eligible bonds must have at least one year until final maturity, but in practice the index holdings have a fluctuating average life of around 8.25 years.

The Bloomberg Barclays US Corporate High Yield Index measures the USD-denominated, non-investment grade, fixed-rate, taxable corporate bond market. Securities are classified as high yield if the middle rating of Moody's, Fitch, and S&P is Ba1/BB+/BB+ or below, excluding emerging market debt. Payment-in-kind and bonds with predetermined step-up coupon provisions are also included. Eligible securities must have at least one year until final maturity, but in practice the index holdings has a fluctuating average life of around 6.3 years.

The Bloomberg Barclays US Municipal Bond Index covers the USD-denominated long-term tax exempt bond market. The index has four main sectors: state and local general obligation bonds, revenue bonds, insured bonds, and prerefunded bonds. Eligible securities must be rated investment grade (Baa3/BBB- or higher) by Moody’s and S&P and have at least one year until final maturity.

The MSCI EAFE Index is designed to measure the equity market performance of developed markets (Europe, Australasia, Far East) excluding the U.S. and Canada. The Index is market-capitalization weighted.

The MSCI Emerging Markets Index is designed to measure equity market performance in global emerging markets. It is a float-adjusted market capitalization index.

The Bloomberg Commodity Index is a broadly diversified index that measures 22 exchange-traded futures on physical commodities in five groups (energy, agriculture, industrial metals, precious metals, and livestock), which are weighted to account for economic significance and market liquidity. No single commodity can comprise less than 2% or more than 15% of the index; and no group can represent more than 33% of the index.

The S&P GSCI Crude Oil Index is a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market.

The S&P GSCI Gold Index, a sub-index of the S&P GSCI, provides investors with a reliable and publicly available benchmark tracking the COMEX gold futures market.

The U.S. Dollar Index is a weighted geometric mean that provides a value measure of the United States dollar relative to a basket of major foreign currencies. The index, often carrying a USDX or DXY moniker, started in March 1973, beginning with a value of the U.S. Dollar Index at 100.000.